Exhibit 10.24
ACQUISITION AGREEMENT
(Paramount International Telecommunications Inc.)
THIS AGREEMENT (the "Agreement") is made this 26th day of February,
1999, by between Carnegie International Corporation, a Colorado corporation (the
"Buyer") and Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxx and Xxx Xxxxxx (sometimes
referred to collectively as the "Sellers" and each individually a "Seller").
RECITALS
I. Sellers own all of the issued and outstanding shares (the "Shares")
of capital stock of Paramount International Telecommunications Inc., a Nevada
corporation (the "Company").
II. Sellers and the Company believe that it will be in the best
interests of the Sellers and the Company to sell all the Shares to the Buyer;
and
III. Sellers and the Company desire to sell, and the Buyer desires to
purchase, all of the Shares, as hereinafter set forth.
IV. Capitalized terms used herein have the meanings set forth in
Section 12.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants, agreements, representations and warranties contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
A. PURCHASE OF SHARES
On the terms and subject to the conditions set forth in this Agreement,
the Sellers hereby agree to sell, transfer and assign to the Buyer and the Buyer
hereby agrees to purchase from the Sellers, on the Closing Date (as defined in
Section 2 hereof), all of the Shares. The Shares shall be conveyed free and
clear of all Encumbrances.
B. CONSIDERATION; CLOSING
1. CONSIDERATION
The sole consideration for the Shares shall be paid in shares
of common stock of Buyer, payable to Sellers in proportion to the Shares owned
by each, except for the additional transferees as noted on Exhibit 2.1 attached
hereto and incorporated herein by reference.
The consideration shall be Six Million Nine Hundred Fifty
Thousand (6,950,000) shares of common stock, without par value (the "Common
Stock"). The Common Stock shall be "restricted securities" as defined in
Securities and Exchange Commission Rule 144 promulgated under the Securities Act
of 1933, as amended (the "Securities Act"). The certificates representing the
shares of Common Stock shall contain the following restrictive legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER
THE PROVISIONS OF THAT ACT AND THE STATE SECURITIES LAWS OR UPON
PRESENTATION OF EVIDENCE SATISFACTORY TO THE CORPORATION THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
2. CLOSING
The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer at Carnegie International
Corporation, Executive Plaza 3, Suite 1001, 00000 XxXxxxxxx Xxxx, Xxxx Xxxxxx,
Xxxxxxxx 00000 at 12:00 noon. (local time) on February 26, 1999, or at such
other time and place as the parties may agree (the "Closing Date"). Subject to
the provisions of Section 9, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 2.6 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
3. CLOSING OBLIGATIONS
At the Closing:
a. Sellers will deliver to Buyer:
(1) certificates representing the Shares,
duly endorsed (or accompanied by duly executed stock powers), with signatures
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange, for transfer to Buyer;
(2) all of the documents, certificates and
instruments required to be delivered, or caused to be delivered by such Seller
pursuant to Section 7.4 hereof;
(3) All records, documents and files of the
Company, including without limitation, all minute books, stock records and
internal account records.
b. Buyer will deliver to Sellers:
(1) certificates representing the Common
Stock duly executed by Buyer;
(2) all of the documents, certificates and
instruments required to be delivered, or caused to be delivered by Buyer
pursuant to Section 8.4 hereof.
C. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
1. ORGANIZATION AND GOOD STANDING; SUBSIDIARIES
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a. Schedule 3.1 contains a complete and accurate list for each
of the Company, the Subsidiary (as defined in Section 3.1(c)) and PMT (as
defined in Section 3.1(d)) of its name, its state or jurisdiction of
incorporation, other jurisdictions in which it is authorized to do business, and
its capitalization. Each of the Company and the Subsidiary is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under all Contracts. Each of the Company and the Subsidiary is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction (including Canada and its Provinces and Mexico)
in which either the ownership or use of the properties owned or used by it, or
the nature of the activities conducted by it, requires such qualification.
x. Xxxxxxx have delivered to Buyer true and complete copies of
the charter and bylaws or other governing instruments (collective,
"Organizational Documents") of the Company and the Subsidiary as presently in
effect, and neither the Company nor the Subsidiary is in default in the
performance, observation or fulfillment of its Organizational Documents.
c. Call Data Clearing, Inc., a California corporation, is the
Company's sole operating subsidiary (the "Subsidiary"). The Company currently
owns 85% of the shares of outstanding capital stock of the Subsidiary, and the
Sellers shall utilize their best efforts to effectuate the Company's acquisition
of the remaining 15% of the shares of outstanding capital stock of the
Subsidiary within one hundred twenty (120) days from the date of Closing,
resulting in the Company having a 100% ownership interest in the outstanding
capital stock of the Subsidiary (the Company and the Subsidiary are sometimes
referred to jointly as the "Acquired Companies" and each individually an
"Acquired Company").
(1) Sellers hereby agree to indemnify and hold Buyer
harmless from any and all fees and expenses relating to said acquisition and any
and all claims arising, directly or indirectly, from the Company's acquisition
of the remaining fifteen percent (15%) of the Subsidiary, including the payment
of reasonable attorneys fees and expenses incurred by Buyer in defending any
such claim, including but not limited to, any claim from any former
stockholders, vendors or creditors of the Subsidiary, or in prosecuting any such
claim to enforce its rights herein. This provision shall survive Closing. Buyer
hereby agrees that in the event of any such claim requiring indemnification,
Sellers shall have the right to provide counsel of Sellers' choosing, subject to
Buyer's approval, which shall not be unreasonably withheld.
(2) The Parties hereby agree that the Parties shall
establish an escrow with Xxxxxxxxx & Associates, LLC serving as escrow agent,
into which Sellers shall deposit Nine Hundred Twenty-Six Thousand Two Hundred
(926,200) shares of the Common Stock, (the "Escrow") which shall be released to
Sellers in proportion to their ownership of the Shares of the Company upon the
submission to Buyer of such documentation as shall reasonably reflect that the
Company has acquired said remaining 15% of the Subsidiary.
(3) The Parties hereby agree to use their best
efforts in maintaining as confidential the existence of the escrow established
herein, subject to any reporting requirements or obligations the Buyer may have
by virtue of its reporting, public company status.
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x. Xxxxxxx own all of the outstanding capital stock of
Paramount Marketing & Telecommunications, Inc. ("PMT"), a California
corporation. Sellers have caused PMT to cease all operations. PMT has no assets
and conducts no business. All of PMT's assets and business have been acquired by
the Company. The Company has no liabilities of any nature whatsoever which were
attributable to PMT.
2. AUTHORITY; NO CONFLICT
a. This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance with their
terms. Upon the execution and delivery by Sellers of all of the documents
required to be delivered in Section 7.4 herein (collectively, the "Sellers'
Closing Documents"), the Sellers' Closing Documents will constitute the legal,
valid, and binding obligations of Sellers, enforceable against Sellers in
accordance with their respective terms. Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the Sellers' Closing Documents and to perform their obligations
under this Agreement and the Sellers' Closing Documents.
b. Except as set forth in Schedule 3.2, the execution,
delivery, and performance of this Agreement and of the Exhibits hereto and the
consummation of the transactions contemplated hereby and thereby will not
violate (with or without the giving of notice or the lapse of time, or both) or
require any registration, qualification, consent, approval, or filing under, any
Legal Requirement. Except as set forth in Schedule 3.2, the execution, delivery,
and performance of this Agreement and the Exhibits hereto and the consummation
of the transactions contemplated hereby and thereby will not conflict with,
require any consent or approval under, result in the breach or termination of
any provision of, constitute a default under, result in the acceleration of the
performance of either Acquired Company's obligations under, or result in the
creation of any Encumbrance upon, any of either Acquired Company's properties,
assets, or businesses pursuant to (i) the Organizational Documents of the
Acquired Companies or any resolution adopted by the board of directors or the
stockholders of either Acquired Company; (ii) any indentures, mortgage, deed of
trust, license, permit, franchise, lease, permit, franchise, lease, Contract, or
other instrument or agreement to which either Acquired Company is a party, or
(iii) any Order by which either Acquired Company or any of its assets or
properties is bound.
Except as set forth in Schedule 4.2 attached hereto and made a part
hereof, Sellers are not and will not be required to obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions contemplated under this
Agreement.
x. Xxxxxxx are acquiring the Common Stock for investment
purposes, for their own account and not with a view to their distribution with
the meaning of Section 2(11) of the Securities Act. Each Seller is an
"accredited investor" as such term is defined in Rule 501(a) under the
Securities Act.
3. CAPITALIZATION
a. The authorized equity securities of the Company consist of
25,000 shares of common stock, no par value, of which 2,000 shares are issued
and outstanding and constitute
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the Shares. Sellers are and will be on the Closing Date the record and
beneficial owners and holders of all the Shares, free and clear of all
Encumbrances. The names of the Sellers and the number of Shares owned by each of
them is set forth in Schedule 3.3(a) attached hereto and made a part hereof. No
legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of either Acquired Company. All of
the outstanding equity securities of each Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of either Acquired Company. None of the outstanding equity
securities or other securities of each Acquired Company was issued in violation
of the Securities Act or any other legal requirement. Except for the Subsidiary,
the Company does not own, or have any Contract to acquire, any debt or equity
investment or interest, direct or indirect, in any corporation, association,
partnership, joint venture or other entity. Delivery of the Shares by the
Sellers at the Closing pursuant to Section 2 of this Agreement will transfer to
the Buyer the legal and valid title to 100% of the issued and outstanding
capital stock of the Company, free and clear of all Encumbrances.
b. Except as set forth in Schedule 3.3(b) attached hereto and
made a part hereof, neither Acquired Company has any outstanding or authorized
options, warrants, calls, subscriptions, rights, convertible securities,
commitments, agreements, or understandings of any character obligating it to
issue shares of its capital stock or securities convertible into or evidencing
the right to purchase shares of its capital stock. Except as set forth in
Schedule 3.3(b) hereto attached hereto and made a part hereof, the number of
shares issuable upon exercise or conversion of the options, warrants, calls,
subscriptions, rights, convertible securities, commitments, agreements, and
understandings set forth in Schedule 3.3(b) hereto is not subject to adjustment
by reason of the issuance of any of the Shares pursuant to this Agreement, the
conversion of any convertible securities outstanding on the date hereof or to be
outstanding immediately after the Closing Date, or the exercise of any warrants
or options outstanding on the date hereof or to be outstanding immediately after
the Closing Date. Neither Sellers nor either Acquired Company is a part to any
Contract, or bound by any certificate or incorporation or by-law provision,
which creates any rights in any person or entity with respect to shares of each
Acquired Company's capital stock, or which relates to the voting, sale, or
transfer of any shares of each Acquired Company's capital stock.
4. FINANCIAL STATEMENTS
Sellers have delivered to Buyer: (a) Audited consolidated
balance sheets of the Company, the Subsidiary and PMT as at December 31, 1996,
1997 and 1998 (including the notes thereto, the "Balance Sheet"), and the
related consolidated statements of operations, statements of stockholders'
deficiency, and cash flow for the fiscal year then ended, together with the
report thereon of Xxxxxxxxx, Pruchter, Xxxxx & Corso, P.C., independent
certified public accountants, and (b) an unaudited consolidated balance sheet of
the Acquired Companies as at September 30, 1998 (the "Interim Balance Sheet")
and the related unaudited consolidated statements of operations, statements of
stockholders' deficiency, and cash flow for the nine months then ended,
including in each case the notes thereto. Such financial statements and notes
fairly present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Acquired Companies as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually
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or in the aggregate, be materially adverse); the financial statements referred
to in this Section 3.4 reflect the consistent application of such accounting
principles throughout the periods involved, except as disclosed in the notes to
such financial statements. No financial statements of any Person other than the
Acquired Companies are required by GAAP to be included in the consolidated
financial statements of the Company.
5. BOOKS AND RECORDS
The books of account, minute books, stock record books, and
other records of the Acquired Companies, all of which have been made available
to Buyer, are complete and correct and have been maintained in accordance with
sound business practices and the requirements of Section 13(b)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (regardless of
whether or not the Acquired Companies are subject to that Section), including
the maintenance of an adequate system of internal controls. The minute books of
the Acquired Companies contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the Boards of
Directors, and committees of the Boards of Directors of the Acquired Companies,
and no meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Acquired Companies.
6. TITLE TO PROPERTIES; ENCUMBRANCES
a. Neither Acquired Company owns any real property. Schedule
3.6(a) attached hereto and made a part hereof, contains a complete and accurate
list of all the Acquired Companies' interest in any leasehold property, together
with all improvements and structures thereon (the "Leased Premises"). The Leased
Premises are all of the real property used in the business of each Acquired
Company. The Acquired Companies have good and marketable leasehold title to the
Leased Premises, free of any Encumbrances. Sellers have delivered or made
available to Buyer copies of the Acquired Companies' leases.
b. Schedule 3.6(b) attached hereto and made a part hereof,
contains a complete and accurate list of all personal property, including but
not limited to all equipment, machinery an fixtures, owned by Buyer or used by
Buyer in the conduct of its business (the "Personal Property"), indicating
whether it is owned or leased by Buyer. Buyer has good and marketable title to
the Personal Property owned by it, free and clear of Encumbrances of any nature
except (i) matters specified in Schedule 3.6(b) attached hereto and made a part
hereof; (ii) materialmen's, mechanics', carriers', workmen's, warehousemen's,
repairmen's or other like Encumbrances arising in the Ordinary Course of
Business; and (iii) Encumbrances for current taxes not yet due.
7. CONDITION AND SUFFICIENCY OF ASSETS
The Leased Premises and equipment of the Acquired Companies
are in good operating condition and repair, and are adequate for the uses to
which they are being put, and none of such Leased Premises or equipment is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The Leased Premises and
equipment of the Acquired Companies are sufficient for the continued conduct of
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the Acquired Companies' businesses after the Closing in substantially the same
manner as conducted prior to the Closing.
8. ACCOUNTS RECEIVABLE
Schedule 3.8 attached hereto and made a part hereof, contains
a complete and accurate list of all accounts receivable of the Acquired
Companies as of December 3, 1998 (collectively, the "Accounts Receivables"),
which list sets forth the aging of such Accounts Receivable. All Accounts
Receivable represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are or will be as
of the Closing Date current and collectible. Each of the Accounts Receivable
either has been or will be collected in full, without any set-off, within ninety
days after the day on which it first becomes due and payable. There is no
contest, claim, or right of set-off, other than returns in the Ordinary Course
of Business, under any Contract with any obligor of any Accounts Receivable
relating to the amount or validity of such Accounts Receivable.
9. INVENTORY
All inventory of the Acquired Companies, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the Balance Sheet or
the Interim Balance Sheet or on the accounting records of the Acquired Companies
as of the Closing Date, as the case may be. The quantities of each item of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of the Acquired
Companies.
10. NO UNDISCLOSED LIABILITIES
Except as set forth in Schedule 3.10 attached hereto and made
a part hereof, the Acquired Companies have no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet or the Interim Balance Sheet and current liabilities
incurred in the Ordinary Course of Business since the respective dates thereof.
11. TAXES
a. The Acquired Companies have filed or caused to be filed all
United States Federal, state, local and foreign tax returns that are or were
required to be filed by or with respect to it. Sellers have delivered to Buyer
copies of, and Schedule 3.11 attached hereto and made a part hereof, contains a
complete and accurate list of, all such tax returns filed since the year ended
December 31, 1996. The Acquired Companies have paid, or made provision for the
payment of, all taxes that have or may have become due pursuant to those tax
returns or otherwise, or pursuant to any assessment received by Sellers or the
Acquired Companies, except such taxes, if any, as are listed in Schedule 3.11
attached hereto and made a part hereof, and are being contested in good faith
and as to which adequate reserves (determined in accordance with GAAP) have been
provided in the Balance Sheet and the Interim Balance Sheet.
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b. Except as set forth in Schedule 3.11, none of the Federal,
state, local or foreign tax returns have been audited by any taxing authority,
including, without limitation the Untied States Internal Revenue Service ("IRS")
or relevant state tax authorities. Schedule 3.11 attached hereto and made a part
hereof, contains a complete and accurate list of all audits of all such tax
returns, including a reasonably detailed description of the nature and outcome
of each audit. All deficiencies proposed as a result of such audits have been
paid, reserved against, settled, or, as described in Schedule 3.11, attached
hereto and made a part hereof, are being contested in good faith by appropriate
proceedings. Schedule 3.11 attached hereto and made a part hereof, describes all
adjustments to the United States Federal income tax returns filed by either
Acquired Company or any group of corporations including either Acquired Company
for all taxable years since December 31, 1996, and the resulting deficiencies
proposed by the IRS. Except as described in Schedule 3.11 attached hereto and
made a part hereof, no Seller or Acquired Company has given or been requested to
give waivers or extensions (or is or would be subject to a waiver or extension
given by any other Person) of any statute of limitations relating to the payment
of taxes of either Acquired Company or for which the Company may be liable.
c. The charges, accruals, and reserves with respect to taxes
on the books of each Acquired Company are adequate (determined in accordance
with GAAP) and are at least equal to that Acquired Company's liability for
taxes. There exists no proposed tax assessment against any of the Acquired
Companies except as disclosed in the Balance Sheet or in Schedule 3.11 attached
hereto and made a part hereof. No consent to the application of Section
341(f)(2) of the Internal Revenue Code ("IRC") has been filed with respect to
any property or assets held, acquired, or to be acquired by any of the Acquired
Companies. All taxes that either Acquired Company is or was required by legal
requirements to withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper governmental body.
d. All tax returns filed by (or that include on a consolidated
basis) either Acquired Company are true, correct, and complete. There is no tax
sharing agreement that will require any payment by either Acquired Company after
the date of this Agreement.
12. NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of either Acquired Company, and no event has occurred or
circumstance exists that may result in such a material adverse change.
13. EMPLOYEE BENEFITS
Schedule 3.13 attached hereto and made a part hereof, is a
complete and correct list of all stock option, stock purchase, stock
appreciation right, bonus, incentive, deferred compensation, severance, profit
sharing, vacation, retirement, health, life or disability insurance, employee
benefit plan, program or arrangement (including, without limitation, any
"employee benefit plan," as defined in Section 3(3) of ERISA of each Acquired
Company, true and correct copies of each of which were delivered to the Buyer
prior to the date hereof. Neither Acquired Company maintains, and has no
obligation or liability with respect to, any employee welfare benefit plan or
any employee pension benefit plan, as such terms are defined in Sections 3(1)
and 3(2), respectively, of ERISA. All reasonably anticipated obligations of the
Acquired Companies,
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whether arising by operation of law, by Contract, by past custom or practice or
otherwise, for salaries, vacation and holiday pay, bonuses and other forms of
compensation which were payable to its officers, directors or employees as of
the date of the Balance Sheet or properly accruable as at such date have been
paid as of the date hereof or adequate accruals have been made therefor in such
Balance Sheet.
14. COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
a. Except as set forth in Schedule 3.14(a), attached hereto
and made a part hereof;
(1) each Acquired Company is, and at all times since
December 31, 1995 has been, in full compliance with any Legal Requirement that
is or was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(2) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or result in a
violation by either Acquired Company of, or a failure on the part of either
Acquired Company to comply with, any Legal Requirement, or (B) may give rise to
any obligation on the part of either Acquired Company to undertake, or to bear
all or any portion of the cost of, any remedial action of any nature; and
(3) neither Acquired Company has received, at any
time since December 31, 1995, any notice or other communication (whether oral or
written) from any Governmental Body regarding (A) any actual, alleged, possible,
or potential violation of, or failure to comply with, any Legal Requirement, or
(B) any actual, alleged, possible, or potential obligation on the part of either
Acquired Company to undertaken, or to bear all or any portion of the cost of,
any remedial action of any nature.
b. Each Acquired Company has all Governmental Authorizations,
including those in Canada and Mexico, that are required in order to permit them
to own or lease their properties and to conduct their businesses as presently
conducted. Schedule 3.13(b) attached hereto and made a part hereof, contains a
complete and accurate list of each Governmental Authorization that is held by
either Acquired Company or that otherwise relates to the business of, or to any
of the assets owned or used by, either Acquired Company. Each Governmental
Authorization is in full force and effect and, to each Seller's and each
Acquired Company's knowledge, no suspension or cancellation of any of them is
threatened. The Governmental Authorizations listed in Schedule 3.14 attached
hereto and made a part hereof, collectively constitute all of the Governmental
Authorizations necessary to permit the Acquired Companies to lawfully conduct
and operate their businesses in the manner they currently conduct and operate
such businesses and to permit the Acquired Companies to own and use their assets
in the manner in which they currently own and use such assets.
15. LEGAL PROCEEDINGS; ORDERS
Except as set forth in Schedule 3.15 attached hereto and made
a part hereof:
a. There is no (i) Order of any Governmental Body or
arbitrator to which either of the Acquired Companies, or any of the assets owned
or used by either Acquired
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Company, is subject; (ii) Order to which any of the Sellers is subject that
relates to the business of, or any of the assets owned or used by, either
Acquired Company; or (iii) Proceeding pending that has been commenced by or
against either Acquired Company or that otherwise relates to or may affect the
business of, or any of the assets owned or used by, either Acquired Company or
that challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the transactions contemplated by
this Agreement (the "contemplated Transactions");
b. To the knowledge of Sellers and the Acquired Companies,
there is no (i) Order against or affecting any officer, director or employee of
either Acquired Company relating to such Acquired Company or its business; (ii)
Proceeding threatened against or affecting either Acquired Company or its
properties, assets or business; (iii) Proceeding threatened against either
Acquired Company's officers, directors or employees relating to such Acquired
Company or its business or (iv) basis for the commencement of any Proceeding
against either Acquired Company or any of such Acquired Company's officers,
directors or employees or assets owned or used by either Acquired Company.
Sellers have delivered to Buyer copies of all pleadings, correspondence, and
other documents relating to each Proceeding listed in Schedule 3.15 attached
hereto and made a part hereof. The Proceedings listed in Schedule 3.15 attached
hereto and made a part hereof, will not have a material adverse effect on the
business, operations, assets, condition, or prospects of either Acquired
Company.
16. ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Schedule 3.16 attached hereto and made
a part hereto, since the date of the Balance Sheet, the Acquired Companies have
conducted their businesses only in the Ordinary Course of Business and there has
not been any:
a. change in either Acquired Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of either Acquired Company; issuance of any security convertible into such
capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by either Acquired Company of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
b. amendment to the Organizational Documents of either
Acquired Company;
c. payment or increase by either Acquired Company of any
bonuses, salaries, or other compensation to any stockholder, director, officer,
or (except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
d. adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
either Acquired Company;
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e. damage to or destruction or loss of any asset or property
of either Acquired Company, whether or not covered in insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Acquired Companies, taken as a whole;
f. entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to either Acquired Company of at
least $5,000;
g. sale, lease, or other disposition of any asset or property
of either Acquired Company or mortgage, pledge, or imposition of any Encumbrance
on any material asset or property of either Acquired Company, including the
sale, lease, or other disposition of any of the Registered Rights and
Proprietary Information (as defined in Section 3.22);
h. cancellation or waiver of any claims or rights with a value
to either Acquired Company in excess of $5,000;
i. material change in the accounting methods used by either
Acquired Company; or
j. agreement, whether oral or written, by either Acquired
Company to do any of the foregoing.
17. CONTRACTS; NO DEFAULTS
a. Schedule 3.17 attached hereto and made a part hereof,
contains a complete and accurate list, and Sellers have delivered to buyer true
and complete copies, of:
(1) each Contract that involves performance of
services or delivery of goods or materials to one or more Acquired Companies of
an amount or value in excess of $5,000;
(2) each Contract that involves the performance of
services by either Acquired Company to the hospitality and hospital industries
in the Ordinary Course of Business;
(3) each Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of one or
more Acquired Companies in excess of $5,000;
(4) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than $5,000 and with terms of less than one year);
(5) each Contract containing covenants that in any
way purport to restrict the business activity of either Acquired Company or
limit the freedom of either Acquired Company to engage in any line of business
or to compete with any Person;
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(6) each Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments for
goods;
(7) each power of attorney that is currently
effective and outstanding;
(8) each Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by either Acquired Company to be responsible for consequential damages;
(9) each Contract for capital expenditures in excess
of $5,000;
(10) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance extended by either
Acquired Company other than in the Ordinary Course of Business; and
(11) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
Each Contract is in full force and effect, is valid and
binding upon each of the parties thereto and enforceable in accordance with its
terms, subject (as to the enforcement of remedies) to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and (as
to the availability of equitable remedies) to the discretion of the equity
tribunal having jurisdiction, no Seller has any reason to believe that there is
or has been any actual or contemplated termination, cancellation or limitation
of, or any modification or change in, any of the Contracts. There has not
occurred any default or any event which, with the lapse of time or the election
of any Person other than an Acquired Company, or any combination thereof, will
become a default, by either Acquired Company or any other party under any of the
Contracts. Each Acquired Company has the right to quiet enjoyment of the Leased
Premises for the full term of the lease thereof. There are no Legal Requirements
or Orders, existing or proposed, which adversely affect or might adversely
affect either Acquired Company's rights under any of the Contracts.
18. INSURANCE
Schedule 3.18 attached hereto and made a part hereof, is a
list of all insurance policies to which either Acquired Company is a party or
that provide coverage to Sellers, either Acquired Company or any director or
officer of an Acquired Company, setting forth the name of the insurer, a
description of the policy, the amount of coverage, the amount of the premium and
the expiration date of the policy. Sellers have delivered to Buyer true and
complete copies of all policies of insurance to which either Acquired Company is
a party or under which either Acquired Company, or any director of either
Acquired Company, is or has been covered at any time within the three years
preceding the date of this Agreement. Each insurance policy relating to the
insurance referred to in this Section 3.18 is valid and enforceable; will
continue in full force and effect following the consummation of the Contemplated
Transactions; and does not provide for any retrospective premium adjustment or
other experienced-based liability on the part of either Acquired Company.
Neither Acquired Company has failed to give any notice or to present any claim
under any insurance policy in a due and timely fashion, nor has it permitted a
lapse in any of its insurance policies at any time. Schedule 3.18 attached
hereto and made a
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part hereof, is a list and brief description of all claims filed or threatened
to be filed by the insureds or third-parties under any insurance policies.
19. ENVIRONMENTAL MATTERS
Except as set forth in Schedule 3.19 attached hereto and made
a part hereof, neither the conduct nor operation of either Acquired Company nor
any condition of any property presently or previously owned, leased or operated
by any of them (including, without limitation, in a fiduciary or agency
capacity), or on which any of them holds an Encumbrance, violates or violated
during the period of such ownership, lease or operation Environmental Laws and
no condition has existed or event has occurred with respect to any of them or
any such property that, with notice or the passage of time, or both, is
reasonably likely to result in liability under Environmental Laws. Neither
Acquired Company has received any notice from any person or entity that either
Acquired Company or the operation or condition of any property ever owned,
leased, operated, or held as collateral or in a fiduciary capacity by any of
them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on, beneath, or originating from any such property.
20. EMPLOYEES
a. Schedule 3.20 attached hereto and made a part hereof,
contains a complete and accurate list of the following information for each
employee or director of the Acquired Companies: employer; name; job title;
current compensation paid or payable and any change in compensation since his or
her initial hire date; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under either Acquired Company's pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, or any other employee benefit plan or any director plan.
b. No employee or director of either Acquired Company is a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Acquired Companies, or (ii) the ability of either
Acquired Company to conduct its business, including any Proprietary Rights
Agreement with Sellers or the Acquired Companies by any such employee or
director. To Sellers' knowledge, no director, officer, or other key employee of
either Acquired Company intends to terminate his employment with such Acquired
Company.
21. LABOR RELATIONS; COMPLIANCE
Neither Acquired Company is a party to or is bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is either Acquired Company the
subject of a proceeding asserting that it has committed an unfair labor practice
(within the meaning of the National Labor Relations Act). Each Acquired
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Company has complied in all respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. Neither
Acquired Company is liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
22. INTELLECTUAL PROPERTY
a. The term "Registered Rights" includes: all letters patent,
patent applications, trade names, trademarks, service marks, trademark and
service xxxx registrations and applications, copyrights, copyright registrations
and applications, grants of a license or a right of one or more of the Acquired
Companies with respect to the foregoing, both domestic and foreign, claimed by
one or more of the Acquired Companies or used or proposed to be used by one or
more of the Acquired Companies in the conduct of its business, whether
registered or not. Schedule 3.22(a) attached hereto and made a part hereof
contains a true and complete list of all Registered Rights. The Contemplated
Transactions will not adversely affect the right, title and knowledge, the
Registered Rights do not infringe on or conflict with the rights or intellectual
property of any third party.
b. The term "Proprietary Information" includes: every trade
secret, know-how, process, discovery, development, design, technique, customer
and supplier list, promotional idea, marketing and purchasing strategy,
invention, process, confidential data, and other information. Except as
described in Schedule 3.22(b) attached hereto and made a part hereof, one or
more of the Acquired Companies own and have the unrestricted right to use the
Registered Rights and Proprietary Information required for or incident to the
design, development, manufacture, operation, sale and use of all products and
services sold or rendered or proposed to be sold or rendered by one or more of
the Acquired Companies, free and clear of any right, equity or claim of others.
Each Acquired Company has taken reasonable security measures to protect the
secrecy, confidentiality and value of all Proprietary Information.
c. Schedule 3.22(c) attached hereto and made a part hereof,
contains a true and complete list and description of all licenses of or rights
to Proprietary Information or Registered Rights granted to one or more of the
Acquired Companies by others or to others by one or more of the Acquired
Companies. Except as described in Schedule 3.22(c) attached hereto and made a
part hereof, (i) neither Acquired Company has sold, transferred, assigned,
licensed or subjected to any Encumbrance, any Registered Right or Proprietary
Information or any interest therein, and (ii) neither Acquired Company is
obligated or under any liability whatever to make payments by way of royalties,
fees or otherwise to any owner or licensor of, or other claimant to, any
Registered Right or Proprietary Information.
d. There is no claim or demand of any Person pertaining to, or
any Proceeding that is pending, or to the Sellers' knowledge, threatened, which
challenges the rights of one or more of the Acquired Companies in respect of any
Registered Right or Proprietary Information.
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23. CERTAIN PAYMENTS
Since December 31, 1995, neither Acquired Company or director,
officer, agent, or employee of either Acquired Company, or to Sellers' knowledge
any other Person associated with or acting for or on behalf of either Acquired
Company, has directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property, or services
(i) to obtain favorable treatment in securing business; (ii) to pay for
favorable treatment for business secured; (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of either Acquired
Company or any Affiliate (as such term is defined by Rule 12b-2 of the
regulations promulgated pursuant to the Exchange Act) of an Acquired Company; or
(iv) in violation of any Legal Requirement; or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Acquired Companies.
24. DISCLOSURE
a. No representation or warranty of Sellers in this Agreement
(including the Exhibits and Schedules hereto) omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
b. No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
c. There is no fact known to either Seller that has specific
application to either Seller or either Acquired Company (other than general
economic or industry conditions) and that materially adversely affects or, as
far as any Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition, or results of operations of the
Acquired Companies (on a consolidated basis) that has not been set forth in this
Agreement.
25. RELATIONSHIPS WITH AFFILIATES
No Seller or any Affiliate of Sellers or of either Acquired
Company has, or since the first day of the next to last completed fiscal year of
the Acquired Companies has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
the Acquired Companies' businesses. No Seller or any Affiliate of Sellers or of
either Acquired Company is, or since the first day of the next to last completed
fiscal year of the Acquired Companies has owned (of record or as a beneficial
owner) an equity interest of any other financial or profit interest in, a Person
that has (i) had business dealings or a material financial interest in any
transaction with either Acquired Company, other than business dealings or
transactions conducted in the Ordinary Course of Business with the Acquired
Companies at substantially prevailing market prices and on substantially
prevailing market terms, or (ii) engaged in competition with either Acquired
Company with respect to any line of the products or services of such Acquired
Company (a "Competing Business") in any market presently served by such Acquired
Company except for less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Except as set forth in Schedule 3.25 attached hereto
and made a part hereof, no Seller
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or any Affiliate of Sellers or of either Acquired Company is a party to any
Contract with, or has any claim or right against, either Acquired Company.
26. BROKERS OR FINDERS
With the exception of obligations assumed by the Company owed
to Bristol Capital, LLC ("Bristol"), Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage of finders fees
or agent's commissions or other similar payments in connection with this
Agreement. As it relates to the Bristol obligation, the Company has committed
eight percent (8%) of the stock consideration referenced in Section 2.1 herein
to Bristol, or its designee, in consideration for services provided herein.
Bristol is not entitled to any part of the value of the note or any of the
proceeds being paid to Xxxxxx Family Trust referenced in Section 6.4 below.
Bristol's rights and obligations with respect to the stock consideration shall
be consistent with those of the Sellers. Sellers hereby agree to indemnify and
hold Buyer harmless from any claims resulting from Sellers' obligation to
Bristol with the exception of a claim against Buyer for failure to issue
securities to Bristol consistent with the terms hereof. Upon the issuance by
Buyer of 560,000 Common Stock to Bristol or its designee, Buyer's obligation
hereunder shall be satisfied and Sellers' obligation to indemnify Buyer
hereunder shall be unqualified.
27. YEAR 2000
The Acquired Companies have exercised due care in assessing
the Year 2000 compliance status of all material computer software and hardware
used in the Ordinary Course of Business and in assessing the Year 2000
compliance status of their customers and counterparties. Each Acquired Company
has taken reasonable steps necessary for its software and hardware used in the
business of such Acquired Company to be Year 2000 compliant on or before the end
of 1999 and the Company does not expect the future cost of addressing such
issues to be material.
28. INVESTMENT INTENT
Sellers are acquiring the consideration securities reflected
herein for investment purposes only, for their own account and not with a view
to the distribution of those securities within the meaning of Section 2(11) of
the Securities Act.
D. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
1. ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Colorado.
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2. AUTHORITY; NO CONFLICT
a. This Agreement and the Escrow Agreement constitute the
legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their terms. Upon the execution and delivery by Buyer of all of
the documents required to be delivered in Section 8.4 herein (collectively, the
"Buyer's Closing Documents"), the Buyer's Closing Documents will constitute the
legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and the
Buyer's Closing Documents and to perform its obligations under this Agreement
and the Buyer's Closing Documents.
b. Except as set forth in Schedule 4.2 attached hereto and
made a part hereof, neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:
(1) any provision of Buyer's Organizational
Documents;
(2) any resolution adopted by the board of directors
or the stockholders of Buyer;
(3) any Legal Requirement or Order to which Buyer may
be subject; or
(4) any Contract to which Buyer is a party or by
which Buyer may be bound.
Except as set forth in Schedule 4.2 attached hereto and made a
part hereof, Buyer is not and will not be required to obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
3. INVESTMENT INTENT
Buyer is acquiring the Shares for investment purposes only,
for its own account and not with a view to their distribution within the meaning
of Section 2(11) of the Securities Act.
4. CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against
Buyer and that challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's knowledge, no such Proceeding has been threatened.
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5. BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Sellers harmless from any such payment alleged to be due by
or through buyer as a result of the action of Buyer or its officers or agents.
E. COVENANTS OF SELLERS
1. ACCESS AND INVESTIGATION
Sellers shall cause each Acquired Company and any
Representatives to (a) afford Buyer and its Representatives and prospective
lenders and their Representatives full and free access to each Acquired
Company's personnel, properties (including subsurface testing), contracts, books
and records, and other documents and data, (b) furnish Buyer with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (c) furnish Buyer with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
2. OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Sellers shall cause each Acquired Company to:
a. conduct the business of such Acquired Company only in the
Ordinary Course of Business;
b. use their best efforts to preserve intact the current
business organization of such Acquired Company, keep available the services of
the current officers, employees, and agents of such Acquired Company, and
maintain the relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships with such
Acquired Company;
x. xxxxxx with Buyer concerning operational matters of a
material nature; and
d. otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of such Acquired Company.
3. NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement,
Sellers shall not cause each Acquired Company to, without the prior consent of
Buyer, take any affirmative action, or fail to take any reasonable action within
their or its control, as a result of which any of the changes or events listed
in Section 3.16 is likely to occur.
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4. REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement,
Sellers will, and will cause each Acquired Company to, make all filings required
by Legal Requirements to be made by them in order to consummate the Contemplated
Transactions. Sellers shall cause each Acquired Company to, (a) cooperate with
Buyer with respect to all filings that Buyer elects to make or is required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(b) cooperate with Buyer in obtaining all consents identified in Schedule 4.2
attached hereto and made a part hereof.
5. NOTIFICATION
Each Seller shall promptly notify Buyer in writing if such
Seller or either Acquired Company becomes aware of any fact or condition that
causes or constitutes a Breach of any of Sellers' representations and warranties
as of the date of this Agreement, or if such Seller or either Acquired Company
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Schedules if the Schedules were dated the date of the occurrence or
discovery of any such fact or condition, Sellers will promptly deliver to Buyer
a supplement to the Schedules specifying such change. During the same period,
each Seller will promptly notify Buyer of the occurrence of any Breach of any
covenant of Sellers in this Section 5 or of the occurrence of any event that may
make the satisfaction of the conditions in Section 7 impossible or unlikely.
6. PAYMENT OF INDEBTEDNESS BY AFFILIATES
Except as expressly provided in this Agreement, Sellers will
cause all indebtedness owed to an Acquired Company by any Seller or any
Affiliate of any Seller to be paid in full prior to Closing.
7. NO NEGOTIATION
Until such time, if any, as this Agreement is terminated
pursuant to Section 9, Sellers will not, and will cause each Acquired Company
and each of their Representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the business or assets (other than in
the Ordinary Course of Business) of either Acquired Company, or any of the
capital stock of either Acquired Company, or any merger, consolidation, business
combination, or similar transaction involving either Acquired Company.
8. BEST EFFORTS
Sellers shall use their best efforts to cause the conditions
in Sections 7 and 8 to be satisfied.
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9. OWNERSHIP OF SUBSIDIARY
As of the Closing Date, the Company shall own 85% of the
outstanding capital stock of the Subsidiary. The Company shall acquire the
remaining 15% of the outstanding capital stock of the Subsidiary which is not
owned by the Company in accordance with Section 3.1(c) hereof and in accordance
with the provisions of the Stock Purchase Agreement between the Company and the
Majority Shareholders of the Subsidiary, dated as of August 14, 1998.
10. NO BUSINESS TRANSACTED BY PMT
Sellers shall not cause PMT to transact any business or exist
as an operating entity.
11. BOARD OF DIRECTOR SEATS
Sellers shall cause the Company to select E. Xxxxx Xxxxx and
Xxxxxx Xxxxxx to the Board of Directors of the Company.
F. COVENANTS OF BUYER
1. APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement,
Buyer will, and will cause each of its Affiliates to, make all filings required
by Legal Requirements to be made by them to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Buyer
will, and will cause each Affiliate to, (i) cooperate with Sellers with respect
to all filings that Sellers are required by Legal Requirements to make in
connection with the Contemplated Transactions, and (ii) cooperate with Sellers
in obtaining all consents identified in Schedule 3.2 attached hereto and made a
part hereof; provided that this Agreement will not require Buyer to dispose of
or make any change in any portion of its business or to incur any other burden
to obtain a Governmental Authorization.
2. BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the
date of this Agreement and the Closing Date, Buyer will use its Best Efforts to
cause the conditions in Sections 7 and 8 to be satisfied.
3. BOARD OF DIRECTOR SEATS
Buyer shall facilitate the nomination of Xxxxxxx Xxxxxx to the
Board of Directors of Buyer as soon as practicable. Buyer shall further use its
best efforts to facilitate the expansion of the Buyer's Board to accommodate an
additional position which may be filled as the designation of Sellers.
4. XXXXXX FAMILY TRUST
The Company is indebted to the Xxxxxx Family Trust (the
"Trust") in the amount of One Million Two Hundred Forty-four Thousand Seven
Hundred Seventy-four Dollars and
20
Forty-eight Cents ($1,244,774.48) (the "Xxxxxx Debt") and such Xxxxxx Debt is
currently due and payable. To the extent the Debt and the accrued interest
thereon have not been paid in full at the end of ninety (90) days from the date
of Closing, the Company shall pay the entire remaining principal balance due
plus any accrued interest. Buyer will guaranty the Company's payment.
5. OPERATION OF COMPANY
The Buyer hereby agrees that it shall maintain the Company as
a wholly owned subsidiary and for a period of two (2) years will not sell,
transfer or encumber the Shares of the Company without the prior written consent
of Sellers. Buyer further acknowledges that the Company shall maintain its
current management, consistent with the Employment Agreements referred to in
Section 7.4 hereof provided the Company reasonably performs in accordance with
its projections which projections shall be agreed upon by the Company and Buyer
and are attached hereto and incorporated herein as Exhibit 6.5. The Buyer hereby
acknowledges that is has no intention of changing the management of the Company,
dismantling the Company or selling off its assets.
a. For purposes herein the projections referred to as Exhibit
6.5 (hereinafter referred to as the "Projections") shall be reviewed and
compared with the actual financial statements of the Company prepared by the
Company not less often than on a quarterly basis. In the event the actual
statements reflect the performance of the Company to be less than ten percent
(10%) of Projections, Buyer shall have the absolute discretion to make changes
in management.
G. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
1. ACCURACY OF REPRESENTATIONS
All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Schedules.
2. SELLERS' PERFORMANCE
a. All of the covenants and obligations that Sellers are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
b. Each document required to be delivered pursuant to Section
2.7 must have been delivered, and each of the other covenants and obligations in
Section 5.4 and 5.8 must have been performed and complied with in all respects.
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3. CONSENTS
Each of the Consents identified in Schedule 3.2 attached
hereto and made a part hereof, and each Consent identified in Schedule 4.2
attached hereto and made a part hereof, must have been obtained and must be in
full force and effect.
4. ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to
Buyer:
a. an opinion of Xxxxxxx and Xxxxxxx, dated the Closing Date,
in the form of Exhibit 7.4(a);
b. employment agreements in the form of Exhibit 7.4(b),
executed by Sellers (collectively, "Employment Agreements");
c. certificate executed by each Seller and the Company
representing and warranting to Buyer that each of Sellers' representations and
warranties in this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as if made on
the Closing Date (giving full effect to any supplements to the Schedules that
were delivered by Sellers to Buyer prior to the Closing Date in accordance with
Section 5.5);
d. a good standing certificate for each Acquired Company from
the jurisdiction of its incorporation and from every jurisdiction in which it is
required to qualify to do business as a foreign corporation dated not earlier
than 10 days prior to Closing;
e. all notes and other instruments evidencing or securing the
Xxxxxx Debt;
f. certified copies of resolutions of the Company's Board of
Directors appointing E. Xxxxx Xxxxx and Xxxxxx Xxxxxx by Buyer to the Board of
Directors of the Company; and
g. such other documents as Buyer may reasonably request for
the purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of Sellers' representations
and warranties, (iii) evidencing the performance by either Seller of, or the
compliance by either Seller with, any covenant or obligation required to be
performed or complied with by such Seller, (iv) evidencing the satisfaction of
any condition referred to in this Section 7, or (v) otherwise facilitating the
consummation or performance of any of the Contemplated Transaction hereby.
5. NO PROCEEDINGS
Since the date of this Agreement, there must not have been
commenced or threatened against Buyer, or against any Person affiliated with
Buyer, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
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6. NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or threatened by any Person any
claim asserting that such Person (a) is the holder or the beneficial owner of,
or has the right to acquire or to obtain beneficial ownership of, any stock of,
or any other voting, equity, or ownership interest in, any of the Acquired
Companies, or (b) is entitled to all or any portion of the Purchase Price
payable for the Shares.
7. NO PROHIBITION
Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time), materially contravene, or conflict with, or result in a
material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
H. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
1. ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
2. BUYER'S PERFORMANCE
a. All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
b. Buyer must have delivered each of the documents required to
be delivered by Buyer pursuant to Section 2.7 and must have made the cash
payments required to be made by Buyer pursuant to Sections 2.2 and 2.7(b)(i).
3. CONSENTS
Each of the Consents identified in Schedule 3.2 must have been
obtained and must be in full force and effect.
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4. ADDITIONAL DOCUMENTS
Buyer must have caused the following documents to be delivered
to Sellers:
a. an opinion of Xxxxxxxxx & Associates, LLC dated the Closing
Date, in the form of Exhibit 8.4(a);
b. the Employment Agreements, executed by Buyer;
c. a certificate executed by Buyer to the effect that, except
as otherwise stated in such certificate, each of Buyer's representations and
warranties in this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as if made on
the Closing Date;
d. a good standing certificate for Buyer from the State of
Colorado or the State of Maryland as the jurisdiction in which it is required to
qualify to do business as a foreign corporation;
e. certified copies of resolutions of Buyer's Board of
Directors appointing Xxxxxxx Xxxxxx to the Board of Directors of Buyer; and
f. such other documents as Sellers may reasonably request for
the purpose of (i) enabling their counsel to provide the opinion referred to in
Section 7.4(a), (ii) evidencing the accuracy of any representation or warranty
of Buyer, (iii) evidencing the performance by Buyer of, or the compliance by
Buyer with, any covenant or obligation required to be performed or complied with
by Buyer, (iv) evidencing the satisfaction of any condition referred to in this
Section 8, or (v) otherwise facilitating the consummation of any of the
Contemplated Transactions.
5. NO INJUNCTION
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Sellers
to Buyer, and (b) has been adapted or issued, or has otherwise become effective,
since the date of this Agreement.
I. TERMINATION
1. TERMINATION EVENTS
This Agreement may, by notice given prior to at the Closing,
be terminated:
a. by either Buyer or Sellers if a material breach of any
provision of this Agreement has been committed by the other party and such
branch has not been waived;
b. (1) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Sellers, if any of the
24
conditions in Section 8 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Sellers to comply with their obligations under this Agreement)
and Sellers have not waived such condition on or before the Closing Date;
c. by mutual consent of Buyer and Sellers; or
2. EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of a right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 9.1, all further obligations of
the parties under this Agreement will terminate, except that the obligations in
Sections 11.1 and 11.3 will survive; provided, however, that if this Agreement
is terminated by a party because of the breach of the Agreement by the other
party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
J. INDEMNIFICATION; REMEDIES
1. SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE
All representations, warranties, covenants, and obligations in
this Agreement, the Schedules, the supplements to the Schedules, the
certificates delivered pursuant to Section 7.4(c) and 8.4(c), and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing and the consummation of the Contemplated Transactions hereby (and any
examination or investigation by or on behalf of any party hereto) until the
expiration of any applicable statute of limitations. A claim for indemnification
or reimbursement not based upon any representation or warranty or any covenant
or obligation to be performed and complied with prior to the Closing Date, may
be made at any time. The right to indemnification, payment of damages or other
remedy based on such representations, warranties, covenants, and obligations
will not be affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) at any time, whether before or
after the execution and delivery of this Agreement or the Closing Date, with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.
2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers, jointly and severally, will indemnify and hold
harmless Buyer for, and will pay to Buyer the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
25
a. any breach of any representation or warranty made by
Sellers in this Agreement (without giving effect to any supplement to the
Schedules), the Schedules, the supplements to the Schedules, or any other
certificate or document delivered by Sellers pursuant to this Agreement;
b. any breach of any representation or warranty made by
Sellers in this Agreement as if such representation or warranty were made on and
as of the Closing Date without giving effect to any supplement to the Schedules,
other than any such Breach that is disclosed in a supplement to the Schedules
and is expressly identified in the certificate delivered pursuant to Section
7.4(c) as having caused the condition specified in Section 7.1 not to be
satisfied; and
c. any breach by any Seller of any covenant or obligation of
such Seller in this Agreement.
The remedies provided in this Section 10.2 will not be exclusive of or
limit any other remedies that may be available to Buyer.
3. INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will pay
to Sellers the amount of any Damages arising, directly or indirectly, from or in
connection with (a) any breach of any representation or warranty made by Buyer
in this Agreement or in any certificate delivered by Buyer pursuant to this
Agreement, or (b) any breach by Buyer of any covenant or obligation of Buyer in
this Agreement.
4. PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
a. Promptly after receipt by an indemnified party under
Section 10.2 or 10.3 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give notice to the indemnifying party of the
commencing of such claim, but the failure to notify the indemnifying party will
not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
b. If any Proceeding referred to in Section 10.4(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense
26
of such Proceeding, in each case subsequently incurred by the indemnified party
in connection with the defense of such Proceeding, other than reasonable costs
of investigation. If the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of Legal Requirements or any
violation of the rights of any Person and no effect on any other claims that may
be made against the indemnified party; and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the indemnifying
party does not, within ten days after the indemnified party's notice is given,
give notice to the indemnified party of its election to assume the defense of
such Proceeding, the indemnifying party will be bound by any determination made
in such Proceeding or any compromise or settlement effected by the indemnified
party.
c. Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
x. Xxxxxxx hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
5. PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought.
6. DAMAGE CAP - NON-FRAUD CLAIMS
Notwithstanding anything to the contrary herein, the Parties
hereby agree that the Sellers' liability for damages arising out of a breach of
any representation or warranty set forth in this Agreement, which does not
amount to fraud, deceit or any intentional tort shall not exceed ten percent
(10%) of the Common Stock for any event which constitutes a breach of a
representation, warranty, covenant or other term of this Agreement. There shall
be no limitation however on any claim for damages as a result of fraud, deceit,
intentional misrepresentation or other intentional acts.
K. GENERAL PROVISIONS
1. EXPENSES
27
Except as otherwise expressly provided in this Agreement, each
party to this Agreement will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Sellers will cause the Acquired
Companies not to incur any out-of-pocket expenses in connection with this
Agreement. In the event of termination of this Agreement, the obligation of each
party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
2. PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to
this Agreement or the Contemplated Transactions will be issued, if at all, at
such time and in such manner as Buyer determines. Unless consented to by Buyer
in advance or required by Legal Requirements, prior to the Closing Sellers
shall, and shall cause the Acquired Companies to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
3. CONFIDENTIALITY
Subject to the provisions of Section 11.2, between the date of
this Agreement and the Closing Date, Buyer and Sellers will maintain in
confidence, and will cause the directors, officers, employees, agents, and
advisors of Buyer and the Acquired Companies to maintain in confidence, and not
use to the detriment of another party or any Acquired Company, any written,
oral, or other information obtained in confidence from another party or an
Acquired Company in connection with this Agreement or the Contemplated
Transactions, unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each
party will return or destroy as much of such written information as the other
party may reasonably request. Whether or not the Closing takes place, Sellers
waive, and will upon Buyer's request cause the Acquired Companies to waive, any
cause of action, right, or claim arising out of the access of Buyer or its
Representatives to any trade secrets or other confidential information of the
Acquired Companies except for the intentional competitive misuse by Buyer of
such trade secrets or confidential information.
4. NOTICES
All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
28
Sellers: c/o Paramount International Telecommunications,
Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx, Esquire
Xxxxxxx & Xxxxxxx
Suite 2800
000 X Xxxxxx
Xxx Xxxxx, XX 00000
Facsimile No.: 000-000-0000
Buyer: Carnegie International Corporation
Executive Plaza 3, Ste. 1001
00000 XxXxxxxxx Xxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxx, President
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxxx, Esquire
Xxxxxxxxx & Associates, LLC
00000 Xxxxxxxxx Xxxxx, Xxxxx 0
Xxxxxx Xxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
5. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of,
or based on any right arising out of, this Agreement may be brought against any
of the parties in the courts of the State of Maryland, County of Baltimore, or,
if it has or can acquire jurisdiction, in the United States District Court for
the District of Maryland (Northern Division), and each of the parties consents
to the jurisdiction of such courts (and of the appropriate appellate courts) in
any such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world. THE PARTIES HEREBY WAIVE THE RIGHT TO
TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
6. FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other
such further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and
29
things, all as the other party may reasonably request for the purpose of
carrying out the intent of this Agreement and the documents referred to in this
Agreement.
7. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
8. ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the
parties with respect to its subject matter (including the Letter of Intent
between Buyer and Sellers dated December 15,1998) and constitutes (along with
the documents referred to in this Agreement) a complete and exclusive statement
of the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
9. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties, which will not be
unreasonably withheld, except that Buyer may assign any of its rights under this
Agreement to any Subsidiary of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
a. Notwithstanding anything to the contrary herein each of the
Sellers shall have the right to assign a portion of the consideration received
or to be received in accordance with the terms of this Agreement to such member
or members of that Seller's family including spouses, children, grandchildren,
spouses of children or grandchildren, nieces or nephews or such entity provided
such assignment or transfer is performed to facilitate appropriate gift, estate
and/or income tax planning goals and not contrary to Seller's statement of
investment intent as warranted in section 3.28 of this Agreement. Each of the
Sellers shall also have the right to assign a portion
30
of said consideration to not more than five (5) non-related persons or entities
with Buyer's prior written consent, which shall not be unreasonably withheld.
10. SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
12. TIME OF ESSENCE
With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
13. GOVERNING LAW
This Agreement will be governed by the laws of the State of
Maryland without regard to conflicts of laws principles.
14. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
L. DEFINITIONS
The following terms, as used herein, have the following meanings:
"Contract" shall mean any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Encumbrance" shall mean any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
"Environmental Laws" shall mean all Legal Requirements pertaining to
the protection of the environment, the treatment, emission and discharge of
gaseous, particulate and effluent
31
pollutants and the use, handling, storage, treatment, removal, transport,
transloading, cleanup, decontamination, discharge and disposal of "hazardous
substances" or "hazardous materials", as such terms are defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"GAAP" shall mean generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the Balance
Sheet and other financial statements referred to in Section 3.4(b) were
prepared.
"Governmental Authorization" shall mean any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" shall mean any:
a. nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
b. federal, state, local, municipal, foreign, or other government;
c. governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
d. multi-national organization or body; or
e. body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Legal Requirement" shall mean all applicable federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees.
"Order" shall mean any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" shall mean an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) Such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority)[and is not required to be specifically authorized by the
parent company (if any) of such person]; and
32
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Persons or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of businesses as such Person.
"Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
"Proceeding" shall mean any actual or threatened claim, action, suit,
arbitration, audit, hearing, inquiry, litigation, proceeding, complaint, charge
or investigation by or before any Governmental Body or arbitrator.
"Representative" shall mean, with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
33
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
WITNESS: SELLERS:
/s/ /s/ Xxxxxxx Xxxxxx
-------------------------- ----------------------------------
Xxxxxxx Xxxxxx
/s/ /s/ Xxxxx Xxxxx
-------------------------- ----------------------------------
Xxxxx Xxxxx
/s/ /s/ Xxxxx Xxxxx
-------------------------- ----------------------------------
Xxxxx Xxxxx
/s/ /s/ Xxx Xxxxxx
-------------------------- ----------------------------------
Xxx Xxxxxx
ATTEST: BUYER:
CARNEGIE INTERNATIONAL CORPORATION
/s/ By: /s/ Xxxxxx Xxxxxx
-------------------------- ------------------------------
Xxxxxx Xxxxxx, President
ACKNOWLEDGMENT BY COMPANY
PARAMOUNT INTERNATIONAL TELECOMMUNICATIONS, INC.
The undersigned officer acknowledges on behalf of Paramount
International Telecommunications, Inc. that Paramount consents to the transfer
effectuated herein.
PARAMOUNT INTERNATIONAL
TELECOMMUNICATIONS, INC.
/s/ By: /s/
-------------------------- ------------------------------
ACKNOWLEDGMENT OF ESCROW AGENT
In accordance with the terms of Section 3.1(c)(ii) hereof,
Xxxxxxxxx & Associates, LLC, hereby agrees to serve as escrow agent.
34
XXXXXXXXX & ASSOCIATES, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxxx, Member
35
